Social Capital and Information Sharing: Impact on Firm Performance

Abstract

SMEs forge relationship with actors in their environment to obtain necessary resources, support and information which they may be unable to generate by themselves. These relationships are born out of linkages through formal and informal networks. Social capital of SMEs evolves out of these networks and generates scarce benefits. Literature provides that information sharing is widely regarded as one of the key returns of social capital which has a significant impact on firm performance (Wu 2008). Various dimensions of social capital in the form of network ties, trust and shared vision in strategic alliances and social alliances of SMEs have unique influences on information sharing among their exchange partners. This study attempts to examine the effects of the dimensions of social capital on information sharing advantages of the SMEs and its influence on firm performance, while drawing a comparison between firms engaged in strategic and social alliances. Analyzing the data from 100 small firms in West Bengal largely support the hypothesis that social capital contributes significantly towards information sharing, the effect of which is consequently translated into firm performance. The influence is found to be more pronounced for firms embedded in strategic alliances as compared to other firms.